Simulation of the EU gas transportation system view from the RF experience and concerns point of view

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1 Presentation at 4-th ERGEG Workshop on the 10-Year Network Development Plan June 14, 2010 Simulation of the EU gas transportation system view from the RF experience and concerns point of view Dr. Vladimir I. Feygin, Principal Director, Institute for Energy and Finance with contribution from the totality of RF experts at the Workshop 1

2 Main topics: 1. Two systems UGSS of Russia (part of FSU UGSS) and appearing EU GTS 2. Experience of simulation 3. Comments on the EWI Study 2

3 1. Two systems UGSS of Russia (part of FSU UGSS) and appearing EU GTS 3

4 Current view of the gas transportation infrastructure in the RF and abroad 4

5 European Transmission Grid 1970 Helsinki Pipelines/LNG-Terminals European transmission pipelines other gas pipelines LNG-Terminals London Canvey Emden Essen Oslo Hamburg Berlin Stockholm Warschau Brüssel Le Havre Paris Bern Prag Wien München Ushgorod Budapest Lyon La Spezia Belgrad Fos-sur-Mer Sofia Lissabon Madrid Barcelona Rom Athen Algier 5

6 European Transmission Grid 2004 Pipelines/LNG-Terminals existing under construction or planned Belfast Dublin Milford Haven London Statfjord Frigg Heimdal Sleipner Isle of Grain Ekofisk Zeebrügge Gullfaks Troll Oseberg Tyra Kollsnes Oslo Kårsto Stavanger W' haven Emden Essen Brüssel Kopenhagen Berlin Stockholm Prag Helsinki St. Petersburg Warschau Minsk Sines Huelva El Ferrol Lissabon Montoir Bilbao Madrid Cordoba Arzew Cartagena Algier Lyon Barcelona Valencia Paris Bern Fos-sur-Mer Skikda La Spezia Tunis Wien Ljubljana Rovigo Krk Rom Bratislava Budapest Zagreb Bukarest Belgrad Sofia Istanbul Brindisi Athen 6

7 Original opposite approaches: ETS was a combination of national subsystems; in some countries corporate subsystems UGSS was designed and developed as unified system from the beginning Only recently this situation started to modify 7

8 It results in relevant APPROACHES TO ANALYSIS, OPERATION, GAS INFRASTRUCTURE PROJECTS: in simple direct lines systems in looped systems: system simulation (flow models, scenarios of development and operation) economic (contractual/regulatory) environment for operation 8

9 In the EU: o Different stages of development on the basis of LOCAL CORPORATE and NATIONAL WIDE systems o Mature infrastructure state of development o Consequent Gas Directives and movement to united European wide gas market o A crucial role of Third Party Access for system development o Role of planning by System Operators o Lack of system-wide optimization of capacity use and of system means (storage, interconnections etc.) for consumer reliable supply in various regimes (incl. extraordinary ones) 9

10 2.Experience of simulation in the RF Levels of Simulation: Balances in various scenarios (comp. original 10Y Plan approach) Representation of Integrated infrastructure links Detailed simulation of flows/system requirements in various conditions/scenarios (comp. EWI Study) Specific design level Links with Stages of Decision Making 10

11 Scheme 1 Production levels Consumption levels M Consumption structure Gas consumption seasonal factors and volumes of UGS reserves Forecasting gas flows schemes Construction sites parameters B B C N Multiyear functioning (system level) Quarterly flows schemes (average expecting conditions) Quarterly flows schemes (peak conditions) H L K Gas reserves (UGS) Data Bases E C Seasonal-peak gas flows Analysis of the system reliability Contingency gas reserves G E Operational and technological justification 11

12 Principal structure and blocks Block 1 Optimization of the gas flows schemes; Block 2 Modeling of principal questions of UGSS operation; Block 3 Basic models of consumption/flows swing factors; Block 4 Models of Calendar Planning; Block 5 - Situational modeling of consumption/flows swing factors; Block 6 - Formation of the lists on the new construction objects and technical economic parameters of gas transportation; Block 7 - Forecast of the system reliability parameters. 12

13 Scheme 2 Quarterly flows schemes (expected average level of gas consumption, UGS parameters are seeking) Situational schemes of seasonal regulation A B A B Zones of UGS utilization (seasonal, extreme) and UGS utilization priorities Modeling of multiyear UGSS functioning (network level) D C Testing of restrictions allowability on the model of multiyear UGSS functioning E 13

14 Information flows and the decisions making. Coding system on Schemes 1&2. A seasonal volumes regulation by UGS; B allocation of extreme volumes by UGS; C- formation of the restrictions on the gas transportation system sections development and the rules on UGS management while injection and extreme situations; D, E change in UGS allocation and type of reserves. 14

15 UGSS: Security of supply basic principles Technical reliability of supply to be achieved via: Unit equipment reliability (not at highest level) Redundancy at facility level Multi-line pipeline systems in large corridors with interpipe connections Integrated storage (incl. Strategic) Integrated dispatch flow/pressure control Priority of operation in the outages/extreme conditions cases Specifically position of export 15

16 UGSS: System security of supply modelling issues Probabilities of various outages in typical seasonal regimes Simulation of single outages, corresponding system control (priorities) and optimal flows Simulation of sufficient number of double outages Formation of statistics of delivery constrains (by nodes), pipe sections load factors, UGS operation Formation of prognosis for integrated characteristics as: awaiting delivery vrs demand by nodes demand for resources of gas in UGSs for these purposes (distribution function of this variate) This might be helpful for further development of the the EWI analysis of system outcomes 16

17 3. Comments on the EWI Study - Definitely a positive step as it is a transfer to a simulation of the EU wide transportation system on a network level - Scenario approach incl. regarding an implementation of import pipeline projects and/or LNG import - A simulation of a variety of modes of system operation (annual, seasonal, peak) - An analysis of an impact of few potential major interruptions of supply - Definitely a helpful tool for a view on undoubtedly necessary network extensions (minimal requirements) - Simulation of the physical flows on fully integrated system 17

18 But: - No link to supply/delivery contracts at all - Understanding of an effective market based on artificially calculated (as shadow prices?!) node prices - No link to enter-exit system in tariffs and capacity booking simply a contradiction to these current approaches - An idealistic view on the interaction of TSOs without even an indication of the potential scale of rerouting of nominations and ways they proceed - No link between dispatch simulation and system development 18

19 Concerns: An uncertainty regarding available information on gas demand locations (on sub-national level) Potential underestimation of system demands due to methodology issues Potentially wrong interpretations of market operations, pricing etc. (i.e. role of cost of production in pricing?) Lack of clarity regarding most realistic scenarios (comp. Gazprom Export presentation) Still lack of integration between development and dispatch simulation 19

20 Some suggestions on a way forward 1. To develop a more realistic model of the EU GTS operation. It could be based not on integral flows (without any link to contracts) but on flows on system paths which are an arithmetic sum of contractual flows. This will let as well to simulate (at an early stage to realistically limit) size of swaps which TSOs have to manage. 2. To introduce within the integral model or in parallel to a flow model a simulation of the operation of entryexit approach and its potential development in line with alternatives of capacity allocation procedures. 20

21 Some recommendations: To analyze further options of infrastructure development in the context of more realistic operational mode. To investigate (using further developed simulation technique) whether the efficient operation of an integrated EU ETS will need a sort of united operational center (for a combination of the dispatch center functions plus planned ACER functions on system development). For this purpose to analyze what sort of consequences could come from not a perfect joint actions of TSO To come to simulation of not only for 2019 but for intermediate time frames in order to realistically plan new investments 21

22 Final comments: We mark an important step forward in the EU integration of the gas transportation simulation (not yet of an operation) We see a number of further challenges caused by current transformations We see a lot of opportunities for modelling analysis and its development We believe in an increase of EU-RF cooperation in this sphere as well 22

23 THANK YOU FOR YOUR ATTENTION! 23